Services Supply Chain Management

Services Supply Chain Management

• Supply chain management for manufactured goods optimizes the value chain, from product design to after-sale customer service.
• Information technology drives coordination in supply management, linking interdependent activities across companies.
• Service supply management is best described as a relationship due to the customer-supplier duality in services, including social media.

Balancing Act in Supply Chain Management

• The main challenge is balancing reliable and prompt customer delivery with managing manufacturing and inventory costs.
• Supply chain modelling helps managers weigh options to improve customer satisfaction cost-effectively.
• Supply chain model portrays the chain as a network, linking asset costs to customer service characteristics, such as responsiveness and reliability.

Physical Goods Supply Chain

• The physical goods supply chain is a network of value-added material processing stages.
• Each stage is defined by supply input, material transformation, and demand output.
• The stages (suppliers, manufacturing, distribution, retailing, and recycling) are linked with arrows showing the flow of material.
• There are inventory stocks between each stage.
• The manufacturing stage involves transforming or assembling materials of external suppliers, creating finished goods inventory for downstream transport.
• Downstream includes distributors and retailers where consumers make purchases.

Environmental Sustainability

• Environmental sustainability concerns have led manufacturers to focus on product life-cycle management.
• The number of products designed to be recycled or remanufactured is increasing, to reduce landfill waste.
• Information transfer flows upstream, encompassing activities by suppliers, process and product design, and after-sales service.
• Downstream information use provides significant benefit from supply chain coordination.
• Success depends on effective partnerships and cooperation among participants in the entire supply chain.

Bullwhip Effect

• A "bullwhip effect" arises in uncoordinated supply chains, a small retail orders amplifies as it moves back up the supply chain.
• The effect is significant to the distributor and manufacturer.

Managing Supply Chain Uncertainty

• Uncertainty stems from supplier delivery performance, manufacturing reliability, and customer demand.
• Inventory acts as an insurance in uncertain environments.
• To meet customer service goals, extra material or safety stocks are used so deliveries can be made if there are upstream issues.
• Any event can cause variability in supplier on-time deliveries, like storms, quality problems, machine failure, or late material arrivals.

Delivery Performance Punctuality

• A distribution of delivery performance punctuality can be established for each supplier.
• Punctuality is used in purchasing negotiations; more reliable suppliers result in smaller safety stock.
• Quality control improves manufacturing reliability and strategic initiatives.
• Total quality control and Statistical process control techniques are examples of quality control techniques.
• Using more reliable transportation and changing product design for postponement increases responsiveness.

Omnichannel Supply Chain

• Warehouses are shifting from store replenishment to support e-commerce
• Companies increase visibility of warehouse inventory across all sales channels
• The omnichannel supply chain allows higher service levels at lower costs.
• The process consolidates demands, and reduces inventory levels.
• Customers are able to check their order status.
• Customer expectations from Amazon ("the Amazon effect") are pressuring retailers to adopt omnichannel retailing.

Service Supply Relationships

• Services create a customer–supplier relationship rather than a material supply chain model.
• Services act on minds, bodies, belongings, and information.
• All services stem from customer input.
• Customers act as suppliers in the service exchange.
• Normal relationships involve simultaneous production and consumption.
• The service forms hubs and chains for customers with outside suppliers.
• Hubs have fewer delays and allow smoother information sharing.

Financial and process efficiencies

• Partnering or sole-sourcing offers financial and process efficiencies in service businesses, like those between physicians and labs.
• Inventory is used to buffer fluctuating demand.
• Customer-supplied inputs occur irregularly with immediate processing expectations.
• Excess capacity manages expectations as services cannot be inventoried.
• Reservation systems plan customer arrivals to match capacity.

Customer Inputs

• Customer inputs can be incomplete, vague, or withheld.
• Incomplete customer inputs can impact service delivery.
• Clear communication is crucial to ensure value-adding expectations and avoid misunderstandings with customers.
• Bidirectional optimization balances what's best for customers and maximizes the service enterprise's benefits.
• The amount of time spent between jobs correlates with distance and is a key factor of capacity for mobile workers.
• Creation of value during the actual time spent with a customer.

Perishability Management

• Time workers spend travelling between customers costs productive capacity.
• Perishability management lowers idle time's impact on workforce capacity.
• Management includes training, refining, and upskilling.
• When potential idle time of workers is identified and directed to training activities, productive capacity can be reclaimed prospectively

Professional Services

• Professional services are attractive because of intellectual challenges, job growth potential, and high income.
• Examples: architects, lawyers, consultants, accountants, and contracting engineers.
• Professionals possess knowledge and licensing/certifications.
• Knowledge workers who deliver professional services has distinguishing features.

Key Features of professional Services

• High levels of specialization and customization.
• Constant face-to-face interactions with clients.
• Professional services are delivered by experienced people.
• Four level of increasing importance knowledge.
• The cognitive knowledge ("know-what") is the basic mastery of a discipline achieved through extensive training and certification.
• This knowledge is necessary but not sufficient for commercial success.
• (Know-How) advanced skills translate “book-learning” is more widespread valuable skill level.
• The systems (know-why) can anticipate actions and unintended consequences, that leads to highly trained intuitions.
• Motivation will give an adaptability for success but if there is no creativity, intellectual leaders lose their knowledge of advantage.

Professional Service Partnerships

• Professional service firms often use partnerships instead of corporations.
• Partners hold equity and govern the firm.
• Junior staff perform daily work and are paid a salary.
• Economic success links to margin, productivity, and leverage.
• Margins (profits from billed fees) often gauge a professional services firm’s departmental profitability.
• Margins are sometimes inaccurate or misleading.
• Revenue factors come from employee ratio.
• Utilization involves two core elements: value (realized fee-per-hour) and utilization of professional staff.
• Utilization measures billable hours to the possible billable hours.

Maintaining Backlog

• Demand and capacity challenges occur often.
• Backlog is tough to maintain despite immediate needs from customers.
• Non-billable work affects the secondary fact of utilization.
• Non-billable work includes business development, training, and management.
• Such activities lack the generation of immediate earnings, but they remain crucial to growth.
• Value provided and captured drive service prices from professional service firms.
• Leverage increases by raising professional to partner numbers, essential for profits.
• Partners benefit from their rates, and staff's ability for customers bill for the services.
• Success results from maximizing leverage and delivering projects with success.
• The key is balancing (margins, productivity, leverage), or alternative is outsourcing to deliver.

Key Outsourcing Components

• Supplier selection and performance evaluation are two keys.
• In the vendor selection process (experience, geographical, and proximity), and the performance quality and delivery are keys.
• Categories include facility, employee, and equipment support: also process facilitation activities.
• Tight specifications are crucial for services like facility support, where vendor selection can be based on cost alone.
• Emergency services requires the vendor to be located.
• Users must input into specifications.
• Employee service requests, personnel support, expertise must match those that seek to outsource requests.
• Facilitator/service are the classifications that deal with information.
• Specifications from professionals are needed from the top beginning (mission, professional process etc).
• Trust in the suppliers.